Press Briefing Via Conference Call by Senior Administration Officials on SCHIP Reauthorization

PARTICIPANTS:

Mike Leavitt, HHS Secretary

and Al Hubbard, Director of the National Economic Council

12:35 P.M. EDT

MS. LAWRIMORE: Good afternoon. Thank you all for joining us today. During his press conference earlier this morning, President Bush announced that he's asked HHS Secretary Mike Leavitt, National Economic Council Director Al Hubbard, and OMB Director Jim Nussle to lead the administration's discussions with Congress about SCHIP reauthorization.

Secretary Leavitt will begin today's call with brief remarks about the discussions and the administration's efforts to put poor children first. And Director Hubbard and Nussle will then join in and answer any questions you might have.

It's going to be on the record, and we will release a transcript afterwards.

Secretary Leavitt.

SECRETARY LEAVITT: Thanks. As was indicated, I'm here with Nussle and Hubbard. We'll be responding to questions after. I'd like to make brief comments.

It is -- as the President made clear, both today and in his State of the Union address and on many other occasions, there is a widely held aspiration that every American have access to a quality insurance policy. If a person is elderly, disabled or poor, that the government has an important obligation to offer them insurance and to pay for much of it.

There is a debate now on the reauthorization of SCHIP. The President has made clear repeatedly that he desires SCHIP to be reauthorized, and has indicated that every -- and has offered a 20 percent increase in the appropriation available for that program. He's also indicated that he wants to get the policy right, that there are two questions here: One is, who should be covered; and the second is, how much will it cost. He would like to focus on who should be covered, and then discuss with Congress the 20 percent increase that he has made -- or offered -- and indicated his desire to have this reauthorized quickly so that children who are covered by it and depend on it do not have any lapse in their coverage.

There are matters on which we agree and matters which we disagree with the Congress. We agree first that the program is important, that it needs to reauthorized. We agree that there needs to be enough money to satisfy the needs for those who are in categories of need.

There is disagreement, however. First we disagree that poor children should be subordinated to adults. We have clearly learned through experimentation that if children and adults are mixed on the Children's Health Insurance Program, that poor children are left behind.

We also believe that poor children should be put before children of middle income or upper income. As you're aware, on the proposal that the President has vetoed, some children from families making as much as $83,000 would, in fact, be eligible. We disagree that this -- that SCHIP should be structured in a way that would cause people to cancel their private insurance in favor of receiving free government insurance. That's not progress.

We are anxious to meet with the leadership of the Congress and those who are engaged from the appropriate committees to begin a serious effort to roll up our sleeves and solve this problem. And I'll look forward to answering your questions along with Director Nussle and Al Hubbard.

Q: A question for any one of you. Would you agree that the bill is actually an improvement over current law, over the current program, when it comes to which adults can be covered or not, and what income levels can be covered or not? And even on crowd-out, I think CBO has said that it's a lower crowd-out rate than is going on under the existing program. So on all three of those things that you've cited, isn't your problem more with the existing program than actually what the bill does?

SECRETARY LEAVITT: I'll start with that. Again, there are two different questions that have to be responded to in the reauthorization of SCHIP -- who should be covered, and the second is, how much will it cost to cover them. We want to get the policy right. We believe that adults should not be covered under SCHIP. Over the course of the last several years, experimentation has been engaged, and with respect to that, it is clear to us and obviously those who are backing this bill that adults should not be part of SCHIP.

The current bill, however, does allow adults to continue until 2012. I might indicate to you that we have seen over the course of the last year and a half over 700,000 adults who are -- who were covered by SCHIP removed from the rolls of SCHIP. Most of them moved to Medicaid. There are now flexibilities built into Medicaid as a result of the changes in the Deficit Reduction Act that allow adults to be covered under Medicaid in a way that they have intended to use SCHIP to accomplish. So there is, I believe, a common recognition that adults should not be covered. However, this bill does not accomplish that task.

Q: Can you address the income levels and the crowd-out, as well, on income levels? Isn't it true that the bill makes improvements on current law, current program, rather than going in the other direction? And also, on crowd-outs, CBO's contention that there is less crowd-out under the bill than under current -- under the current program?

SECRETARY LEAVITT: Well, we disagree with that assessment. We believe that crowd-out is significant. In fact, we believe CBO themselves indicated as many as 1.5 million people would be motivated to cancel private insurance in favor of government-paid insurance. And we do not see that as being progress. We see that as a contradiction.

And we would -- let's see, your first question was on --

Q: On the income levels, which, under the bill, they had some restrictions regarding 300 percent and so on. Isn't that an improvement over the existing program, rather than going in the other direction?

SECRETARY LEAVITT: Let me describe the current situation and contrast it with the bill. When SCHIP was originally passed, there was no -- I'm just trying to understand your question, but let me say what I was going to, and then if I have not answered your question, Richard, I'll keep going -- there was no direct expectation listed in the bill as to what people had to do for those who were under 200 percent of the poverty line before they could extend to other populations. Recently, CMS offered guidelines indicating that -- or guidance -- indicating that 95 percent of children under 200 percent needed to be covered before it could be expanded to other populations, which clearly would include adults. We believe that is an appropriate principle, given our desire to see poor children put before adults, poor children put before middle-income families and upper-income families.

DIRECTOR HUBBARD: Let me jump in here a second, Mike, if I could. Richard, in terms of whether this is an improvement over existing law, currently nine states are able to cover up to 300 percent of poverty. This would allow all 50 states to cover up to 300 percent of poverty. So what this is doing is basically opening this up -- and when we say 300 percent of poverty, that's a family of four that earns over $60,000 a year. Now, you're going to have 41 additional states that will have the opportunity and the funding to cover kids from families that earn up to $60,000 plus a year. And of course, for New Jersey, I think it's around $70,000 a year, and for New York it's $80,000 a year.

Q: This question is for anyone. What is the -- assuming that the House is not able to override the veto tomorrow, what is the post-vote strategy from the administration's standpoint? Is there a plan to -- Senator McConnell, as you know, has an alternative piece of legislation. Would the administration be interested in that as a counterproposal? What are you looking at?

SECRETARY LEAVITT: This is Mike Leavitt. I'll comment, and invite my colleagues to.

I think everyone understands we just need to let the veto process play out. We believe that the veto will be sustained. The President has called on us to be the -- to represent the administration in those discussions and negotiations. We would intend to immediately make contact with the leaders of both parties and the relevant committees to engage in those discussions. The strategy going forward would need to result from those discussions.

Q: Do you like the looks of McConnell's alternative bill?

SECRETARY LEAVITT: At this point, our purpose is to wait for the veto to play out. Then we'll meet the relevant members of the committee and we'll be discussing what alternatives could be crafted from the combination of alternatives that have been presented by various players. We will not focus directly on one or the other proposals. We'd like to find the common ground that would allow us to get this reauthorized. Where those ideas come from are less important than actually finding the right spot.

Q: Hello, Mr. Secretary. I have a question about -- I have two questions, but the first one has to do with the states that are planning -- that are drawing up contingency plans to scale back their programs or impose waiting lists, should the funding for this program become unstable. Do you have anything to say to them to reassure them that that won't happen?

SECRETARY LEAVITT: We are actually in constant contact with the states. We have had meetings with teams from HHS in 48 of the states. I've been in contact directly with the governors in all but I think two states -- have contingency plans in place to assure that continuity of coverage can be achieved. Now, we hope very directly to see this resolved and see SCHIP reauthorized on a forward-looking basis. However, if we're not able to accomplish that between now and November the 15th, we would anticipate that Congress would need to continue the program in the way that they have in the last six weeks.

Q: Okay. But I'm told that if they just extend the funding at the current levels, then you're going to have to -- you're going to start seeing some states run out, because they do need an increase. Is that what you're hearing also?

SECRETARY LEAVITT: There are states, in time, who begin to run out of money, and that's something they'll need to contemplate. We're hopeful we can get this resolved before that occurs.

Q: Okay. And the follow-up question had to do with the desire of some lawmakers to cover uninsured children in the middle class. If the eligibility level for the program was raised to, say, families of three times the poverty level, and those families were required to pay a substantial share of the premium -- say, 50 percent or something on that order -- would that be an acceptable compromise to the administration, so it's just not a government giveaway?

SECRETARY LEAVITT: The principles we have laid out are very clear -- that we want to see poor children covered; we want to see them put before adults; we want to see them covered before -- from middle income or those in upper incomes. We are open to a number of different alternatives in how we can get Americans in the category of the insured. But we believe SCHIP ought to be focused on poor families.

Now, the President has put forward proposals that would -- and the Congress has -- that would allow as many as 20 million people to get insurance. We'd like to get SCHIP reauthorized and get on to a larger conversation when we can talk not just about families between 200 and 300 percent of the poverty level; we'd like to talk about ways that we could make insurance within the reach of millions of Americans, including children. And we think that's a very important conversation. We think there are -- it's evident to all of us that the American people want us to find ways in which to help in this area, and we'd like to get on with the bigger conversation.

Q: Thank you.

DIRECTOR HUBBARD: Let me just jump in here a second, if I could.

Q: Okay, who's speaking, please?

DIRECTOR HUBBARD: This is Al Hubbard speaking.

Q: Thank you.

DIRECTOR HUBBARD: When you talk about covering middle- and upper-income -- kids from middle- and upper-income families, I think it's very important that the American people understand that this President believes very strongly in protecting the private health care system. And to be perfectly frank, many Democrats are candid that they would like to go to a single-payer system or socialized medicine, and we think that would be a disaster for this country and a disaster for health care.

The result would be rationed care -- just like it is in Canada and Great Britain -- it would be rationed care where you wait in line 12, 18, 24 months for elective surgery like hip replacement or knee replacement where prices are fixed, where you're limited in terms of the doctors you can see or the hospitals you can go to. And we think this would be a huge mistake. And what the Democrats are trying to do with this proposal is basically -- it's just another step to replace private health care with government-provided health care, which is health care that won't provide the kind of choices and options and flexibility that the American people expect and demand when it comes to health care.

What this President is focused on is protecting the private health care system, while making certain that those from low-income families have the resources and are able to have appropriate health care coverage.

Q: Thank you.

Q: I can't help but find that coincidental that you're limiting to one question, but that's okay. You talked about the importance of keeping this program limited to poor children and not adults. So what is the administration's position on extending this to poor pregnant women, who are adults?

I would just point out that pregnant women are currently covered because of the -- of their unborn children, and therefore, already covered.

Q: But aren't they only covered by regulation, not statutory coverage?

SECRETARY LEAVITT: I'm not sure I'm able to respond to that. I don't know -- that's a question, Paula, we'll have to get back to you on.

Q: Well, I mean, that was advised to me by someone else, in terms of the -- the difference is the administration has it under regulatory coverage, but not statutory. So I just wondered why the administration is opposed to --

SECRETARY LEAVITT: Whether it's statute or regulation, women who are expecting children are covered because of their child. And I'm not sure that's a distinction, but we'll get back to you with an answer, and if others would like to have it, we'll make it available.

Q: I'm trying to see where exactly there's room for common ground, for compromise between the administration and lawmakers within the scope of the bill that Congress is trying to pass right now. What particular areas do you see where there could be some movement to something you both can agree to?

SECRETARY LEAVITT: I'll respond to that first. I indicated there are areas where we do have agreement, and it begins with 6.6 million people who are currently covered under the SCHIP program. There's a discussion about 10 million people that they would like to see covered. If you break that down, 6.6 million are already covered. There's a -- by their numbers, there's somewhere between 500,000 and 800,000 children who are already eligible but not covered. There are 1.7 million who are already eligible for Medicaid.

We need to do a better job going out and finding children who are uninsured and eligible, and enroll them. I was Governor for 11 years. I know this program well. I know it's hard to find children who are in low-income situations and uninsured, but that's what this bill was created to do. It's a lot easier for a state to find someone who's making $60,000 or $70,000 a year and has private insurance -- to persuade them to drop their private insurance and to pick up free government insurance. But that's not progress. Even though it may add people to the rolls of SCHIP, it does not add to the rolls of the insured.

And we need to focus on a common goal of helping people who are now uninsured become insured. That should be about finding low-income children who do not have private insurance and helping them find private insurance, as opposed to people who have private insurance and helping them to find free government insurance. That's progress.

Q: But in terms of the details before you in the bill that's being presented, are there any particular provisions where you see room for movement within the structure of the bill itself right now?

SECRETARY LEAVITT: I think the most important thing is a common desire to -- (inaudible) -- to protect children. And once the bill has been -- the veto has been sustained, we'll look forward to meeting with members of Congress and working through the alternatives on how we can achieve that common goal.

Q: I'd just like to ask about two concerns that had been raised in Congress and I don't believe have been mentioned in this conference call, and ask if you'd like to address either one: tax increase and illegal immigrants being covered.

SECRETARY LEAVITT: First on the tax question, we believe poor children need to be covered under SCHIP, and that we can do it and should it without raising taxes. Second, with respect to illegal immigration, we believe that poor children should be first and American children should be put first.

The bill does prohibit the extension of these benefits to those who are not here legally. However, CBO itself indicates that the rules as they have been -- as they are written in the law, would create substantial room for those who are not to be covered, and at substantial expense. So there is agreement on the principle; however, not on the details.

Q: Thanks very much. Gentlemen, I hear a lot about -- people are appointed to talk, and you want to talk. But I don't sense from what the President said before any little bit of movement off your position. What I'm wondering is -- I mean, the crux of the difference seems to me that Democrats want to increase not just coverage but eligibility. Are you willing to look at proposals that would increase eligibility, however small that increase might be? Are you willing to consider those proposals?

SECRETARY LEAVITT: SCHIP is about poor children, and we desire to get it reauthorized and focused on children in categories 200 percent of the poverty level and below. The President has indicated that the 20 percent -- if the 20 percent he has offered is not adequate to cover that population, he's prepared to find more money.

Again, there are two problems here. Let's define, first of all, the policy; and second, let's deal with the arithmetic. And once we have the policy in agreement, we can find a way to satisfy the financial requirements of the budget.

Q: But you haven't answered the question at all. What I'm wondering is, are you willing to look at a possible change in the policy, an alteration that would increase eligibility to any extent, or is it only going to be the 200 percent level?

SECRETARY LEAVITT: I've told you our position. We hope to meet with members of Congress; we'll have that conversation with them.

DIRECTOR HUBBARD: But, Mike, as you've said -- and I don't know whether you've made it clear here, we've made it clear that for kids above 200 percent of poverty who are currently covered by SCHIP, that we're in favor of their SCHIP coverage continuing.

SECRETARY LEAVITT: I have made that clear, and it should be made clear, as well, that states do have the capacity with their allotment greater than 200 percent, greater than 250 percent if they are successful in finding a significant -- or a satisfactory number of children in that category.

What we don't want to see is for states to abandon the effort of finding low-income, uninsured children in favor of using their allotment to fund families that are making $60,000, $70,000 or more, who have private insurance, and moving them, as newly eligibles, to SCHIP. That makes the SCHIP role -- going up, but it does not help the role of the uninsured, and it clearly does not help those who are in the greatest need, which are poor children. We want to put poor children first. We want to put poor children before adults. We want to put poor children before those in middle and upper incomes. And we certainly want to put poor children who aren't insured before children who are already insured in the private market.

DIRECTOR HUBBARD: Just one other point very briefly here. I think it's important for the American people to understand that Medicaid, which is available for the poorest in our society, currently covers 29.5 million kids. And by the way, the governors can use Medicaid programs for kids about 200 percent of poverty. So there is a lot of flexibility out there. But as Mike has said, for SCHIP, the President's focus is, first, children; and second, poor children. And we believe very strongly that the money should first be used for poor children.

SECRETARY LEAVITT: I'd just like to add one other thing to this. There is a widely held aspiration in this country for everyone to have access to health insurance.

Q: Who is this? I'm sorry.

SECRETARY LEAVITT: This is Mike Leavitt.

Q: Okay, thank you.

SECRETARY LEAVITT: And SCHIP is an important program in meeting the government's obligation to assure those who are in hardship -- that is to say the elderly, the disabled or the poor -- to have insurance. Everyone else deserves to live in a state that has organized their market in a way that people can have access to insurance they can afford. If they can't afford it, the government may choose at that point to help them.

Again, we need to get on with that conversation, but we need to first reauthorize SCHIP. There are proposals on the table. They're not linked to SCHIP, but they clearly ought to be part of our conversation as we move forward in this Congress. We could, in fact, see millions receive health care -- adults and children. We need to get SCHIP reauthorized and then begin to have the larger conversation.

Thank you.

END 1:04 P.M. EDT